Challenging times for Tru-Cape

South African apple and pear exporter Tru-Cape Fruit Marketing has said it is cautiously optimistic ahead this year despite facing many of the same challenges that made 2022 a tough year.

The company has predicted the industry’s volume will be between 8 per cent and 10 per cent lower compared with last year, largely as a result of “devastating” hail in Ceres and some hail damage in Grabouw.

Tru-Cape currently exports about 70 per cent of the crop while 30 per cent remains on the local market.

Industry body Hortgro in January estimated that South African apple exports could decrease by 1 per cent this season from roughly 45.3m cartons in the previous season to 44.8m cartons.

Pear exports were expected to drop 3 per cent from 21.2m cartons in the previous season to 20.6m cartons this season, but Tru-Cape maintained the figure was nearer 10 per cent across the board.

Under pressure

Following a recent visit to Fruit Logistica, Tru-Cape managing director Roelf Pienaar said it was “fascinating” to see that in all markets, people were under pressure.

”Consumer price inflation and massive increases in input costs are applying pressure on the consumer who, as a result of less disposable income, is buying less and when she does, buying cheaper.”

According to Pienaar only the discount supermarkets, such as Aldi, were growing, doing so at the expense of the other supermarkets and grocers.

Pienaar noted that buyers were asking for higher-coloured fruit.

“The redder the better,” he said, adding, “the good news is that our growers have and continue to invest in Gala-types and varieties such as Cripps Red which are in demand.

”Golden Delicious remains our biggest variety (especially into West Africa) and makes up about 20 per cent of our apple basket.”

Pienaar noted that consumer focus on price was forcing consumers, especially in Europe, to buy run-of-the-mill varieties rather than managed or club varieties such as Pink Lady, Envy, and Kanzi, which attract a price premium.

Tru-Cape has increased its intake specification and asking growers to only send the right varieties in the correct sizes to the packhouse.

“If we send an unwanted variety to the market it ends up costing the grower,” Pienaar confirmed. “We are expecting a price adjustment as growers are hard-pressed to continue working for marginal returns.”

The impact of changing climatic conditions could lead to opportunities in Europe which, after a hot summer, may not have the hoped-for fruit quality.

In addition, news of severe flooding in New Zealand could have an impact on the demand for South African fruit in the Northern Hemisphere in the coming season.

Pienaar explained that because Tru-Cape had a wide client base in over 100 countries around the globe, they would always search for the best option for their grower’s fruit.

Future growth

Although continental Europe and the UK are important markets for Tru-Cape, their aging population profile suggested that future growth could come from Africa, India, China and the Middle East.

Pienaar said the company hoped to soon again be able to ship to Thailand, an important market for South African apples and pears previously, and to The Philippines. “We have just begun to scratch the surface with exports to China,” he noted.

Although improvements in efficiencies in the ports had made a positive contribution and while some freight costs were normalising, logistics were still adding to the complexity and cost of the business.

Tru-Cape said that some shipping routes had increased costs threefold while in January and February, albeit known to be windy months, the Port of Cape Town was windbound for 55 hours in January and 52 hours in February, which had negatively impacted the loading of ships.

And, while break-bulk carriers can and have been used on some routes, Tru-Cape said refrigerated containers remained the best solution, especially for fruit bound for the Far East.

“We will deal with the challenges as they arise,” said Pienaar, adding that the market was changing and in his decade at Tru-Cape it had never been as complex.

Geo-political factors

The company said that there were many geo-political factors that were out of their hands yet impacting Tru-Cape and the markets they served.

“We are concerned about South Africa’s Grey-listing by the FATF, a global inter-governmental body, in terms of our ability to be paid,” said Conrad Fick, Tru-Cape’s marketing director. “And, the shortage of US dollars in West Africa, changes to the Nigerian currency, and Ghana’s 54.1 per cent inflation all add to the complexity. Price discussions with clients are very interesting.”

South Africa’s rolling blackouts continued to erode grower income, according to Pienaar.

“One Elgin grower said he is spending R150,000 a month on diesel for generators to power irrigation,” he said. ”We will only know the full impact of the cost of load shedding at the end of this year but it will be in millions of Rands.”

Pienaar added that while packhouses had largely invested in renewable energy sources, this cost had also come off the grower’s bottom line.